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"Getting more workers engaged in professional 401(k) advice should be a top priority for employers. We’ve seen the positive impact it can have on both behaviors and outcomes"

SAN FRANCISCO--(BUSINESS WIRE)--The majority ofAmerican workers in a new survey accept
responsibility for financing their own retirement and are relying
primarily on their 401(k) to get them there, but many lack the
confidence to effectively manage their retirement savings.

The nationwide survey of more than 1,000 401(k) plan participants,
commissioned by Schwab Retirement Plan Services (“Schwab”), shows a high
level of self-reliance among respondents. Roughly nine in ten (89%) say
they are counting on themselves for the money to support their
retirement, and just five percent expect to rely mostly on the
government for financial help after they stop working full time.

This self-reliance is fueled by anticipated use of 401(k) plans. A large
majority of survey respondents (61%) report the 401(k) is their only or
largest source of retirement savings. More than half of respondents
(55%) have increased their savings rate in the last two years and most
(70%) say their 401(k) is in better shape now than ever before.

“It’s gratifying to see so many people taking the reins of their
retirement,” said Steve Anderson, head of Schwab Retirement Plan
Services. “In our view, contributing to a 401(k) plan should be the
number one savings priority for workers. Planning ahead, taking action
and getting the help you need along the way are key steps to help build
sufficient retirement savings.”

Still, many are unsure how to invest…

Interestingly, the survey reveals that saving in a 401(k) is not enough
to ensure confidence for many participants. For example:

More than half (52%) find explanations of their 401(k) investments
more confusing than explanations of their health care benefits (48%).

Fifty-seven percent wish there was an easier way to figure out how to
choose the right 401(k) investments.

Nearly half (46%) don’t feel they know what their best investment
options are and one-third (34%) feel a lot of stress over correctly
allocating their 401(k) dollars.

…And they want help

Today, many 401(k) plans offer some type of professional advice, which
can be vital in helping people take better control of their investments.
Of those surveyed, 61 percent want personalized investment advice for
their 401(k). Participants expressed a desire for guidance on everything
from asset allocation to risk tolerance and retirement income planning.

Most importantly, the survey found that investment confidence nearly
doubles when workers have the help of a financial professional.
Approximately one-third (32%) of survey participants expressed
confidence in making the right 401(k) investment choices based on their
own ability, compared to 61 percent if they also had the help of a
financial professional.

“Getting more workers engaged in professional 401(k) advice should be a
top priority for employers. We’ve seen the positive impact it can have
on both behaviors and outcomes,” said Anderson. “At Schwab Retirement
Plan Services, Inc., participants who used third-party, professional
401(k) advice tended to increase their savings rate, were better
diversified and stayed the course in their investing decisions,” he
noted.*

Additional findings

Other findings show respondents are engaged and place a priority on
their 401(k):

Save it, don’t spend it: Given a choice about how to use a
$5,000 bonus, nearly two-thirds (64%) would save it in their 401(k)
rather than take the cash now. Forty-eight percent immediately chose
the 401(k) route and an additional 16% chose the 401(k) after tax
consequences were explained.

Post-crisis recovery: Seventy-four percent of respondents said
their 401(k)s have recovered from the financial crisis about as fast
or even faster than expected.

Check the index: Nearly three-quarters (74%) would rather pay
low investment fees for index funds than pay higher fees for actively
managed funds that could potentially outperform the market, but may
also carry greater risk.

About the Survey

This online survey of U.S. 401(k) participants was conducted by Koski
Research for Schwab Retirement Plan Services, Inc. The survey is based
on 1004 interviews and has a three percent margin of error at the 95%
confidence level. Survey respondents worked for companies with at least
25 employees, were current contributors to their 401(k) plans and were
25-75 years old. Survey respondents were not asked to indicate whether
they had accounts with Charles Schwab. All data is self-reported by
study participants and is not verified or validated. Respondents
participated in the study between June 5 and June 11, 2013. Detailed
findings can be found at www.aboutschwab.com/press/research.

About Charles Schwab

At Charles Schwab we believe in the power of investing to help
individuals create a better tomorrow. We have a history of challenging
the status quo in our industry, innovating in ways that benefit
investors and the advisors and employers who serve them, and championing
our clients’ goals with passion and integrity.

*Charles Schwab in conjunction with Koski Research, The New Rules of
Engagement for 401(k) Plans, 2010. Retirement plan investment advice is
formulated and provided by GuidedChoice Asset Management, Inc.
(GuidedChoice®), which is not affiliated with or an agent of Charles
Schwab & Co., Inc. (CS&Co.), Schwab Retirement Plan Services, Inc.
(SRPS), or any of their affiliates.